Buying a House About to Get Tougher
February 15, 2009
Post Tags: Fannie May New Mortgage Fees , Freddie Mac Condominium purchase fee
Tucson Home Buyers Are You Aware Mortgage Fees Are Going UP
Kenneth Harney once again provides all home buyers with a “GOTTCHA” that is on the horizon when securing a mortgage. While rates have dropped this past week and are back hovering around the 5% level. There are new fees about to go into effect which will greatly increase the cost of securing a mortage. In some cases it is going to be a huge jump if you are thinking about purchasing a condominium.
Here are some of the details from Mr. Harney’s article.
Under Fannie’s and Freddie’s new guidelines, even applicants who assumed that their FICO scores would get them favorable rates will be charged more unless they can come up with down payments of 30 percent or higher. For example, a buyer with a 699 FICO score who can bring a sizable down payment of about 25 percent to the table will now get hit with a 1.5 percent “delivery” fee at closing under the new guidelines.
A buyer with a FICO score between 700 and 720 will pay an extra three-quarters of a point. Even someone with a 739 FICO — once considered a platinum guarantee of the best rates available — will get dinged with a quarter-point add-on.
Condominium Fee Hike From Fannie and Freddie
Charles McMillan, president of the National Association of Realtors, complained in a letter to the Federal Housing Finance Agency, the regulator of Fannie and Freddie, that not only were individual fee increases unjustified, but that in combination they could seriously deter home purchases. McMillan said, “A borrower with a credit score of 670 making a 20 percent down payment for a condominium would have the fee raised from 150 basis points (1.5 percent) to 350 basis points (3.5 percent) — more than double” under Fannie Mae’s new schedule.
If you are thinking about purchasing a condominium and will have a loan you have a couple of options to avoid this new fee structure.
- Pay cash
- Go FHA for your loan
- Pray it doesn’t go into effect
Options 1 and 2 are your best bet.
You can read Mr Harneys entire article titled “Fannie, Freddie make buying house tougher” at the Arizona Daily Star website.
These New Fannie Mae and Freddie Mac fees are something you have to consider in your total cost of purchasing a home in the near future.
February 15th, 2009 at 6:03 pm
Ouch. 30% is a lot of cash to come up with, for most people! It’s a big jump from even the 20% required to avoid PMI.
February 19th, 2009 at 7:45 am
[...] new fee structure Fannie Mae and Freddie Mac are planning to put into effect in May can effectively wipe out any [...]